Business Ethics Expert Opines on Fraudulent Mortgage Scheme

This case involves a class action suit against a large financial entity that allegedly committed fraudulent practices in connection with its home mortgage loan servicing business. The defendant devised a scheme to deceive homeowners who were behind on their mortgage payments into believing they had to pay thousands of dollars in unlawfully marked-up fees. Additionally, they used a wholly-owned subsidiary that performed informal appraisals via broker price opinion (BPO) to engage in its scheme to disguise hidden, marked-up fees so that it could earn additional, undisclosed profits. A business ethics expert was sought to opine on the ethical implications of self-dealing between a parent company and a subsidiary.

Question(s) For Expert Witness

1. Please describe your experience as it relates to mortgage-related business ethics.

2. Are you familiar with broker price opinions (BPO) and how they work?

3. Are you able to discuss the ethical implications of self-dealing between a parent company and a subsidiary?

Expert Witness Response E-098578

I have degrees from Harvard College, Stanford Law School, and Princeton's History Department. I have published two dozen articles in academic and popular journals on financial regulation and central banking. I regularly consult with the government, lawyers, and industry members on related topics. I also teach courses for undergraduates, MBAs, and executives at Wharton on topics ranging from business ethics in the financial industry to financial regulation. I am familiar with broker price opinions (BPO) and how they work, and I am able to discuss the ethical implications of self-dealing between a parent company and a subsidiary. I lecture regularly on this topic and have published a book on central banking at the Federal Reserve System which includes a chapter on ethics and self-dealing in banking. Before becoming a professor, I worked in private legal practice, consulting on similar cases in consumer lending.